More Than 100 Credit Suisse Bond Holders in Singapore Join Lawsuit to Seek $100 Million in Restitution
Over 100 investors have joined a class action to recover about $100 million in losses stemming from the collapse of Swiss lender Credit Suisse and the subsequent wiping out of their Additional Tier-1 (AT1) bond holdings.
In March the Swiss regulator- Swiss Financial Market Supervisory Authority (FINMA) had ordered 16 billion Swiss francs (S$23.8 billion) of the troubled bank’s AT1 bonds to be written down in the emergency takeover of Credit Suisse by rival UBS.
This action infuriated bond holders around the world, due to the fact that bond holders tend to sit higher on the priority ladder when it comes to repayment, when a bankruptcy occurs. Instead, holders of the Credit Suisse AT1 bonds – also known as contingent convertible bonds – received nothing, whereas shareholders received US$3.23 billion (S$4.3 billion).
The investors who have joined the class-action suit, represented by the law firm Withers in their statement said they had been striving to save for their retirement. Many of them bought one lot of the Credit Suisse AT1 bonds, which was priced at U.S. $200,000.
Ordinarily, it was the duty for banks and financial institutions to recommend most types of bonds to such investors, as bonds are considered a safe asset class.
However, as the CS AT1 bond contained a clause which, when triggered, would wipe out its value, many of the investors felt that it should not have been sold to them. Some investors contended that the clause was not highlighted to them.
In the meantime, the class action being led by Withers is expected to be filed by the end of this month.
“We are adopting a Singapore-centric approach, with emphasis on rights arising from the Singapore-Switzerland free trade agreement,” said Mr Shaun Leong, Partner at the firm.